STATE OF NEW JERSEY Board of Public Utilities Two Gateway Center Newark, NJ ) ) ) ) ) ) (Service List Attached)

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1 Agenda Date: 3/2/07 Agend;3 Item: 7 A STATE OF NEW JERSEY Two Gateway Center IN THE MATTER OF THE BOARD OF PUBLIC UTILITIES VS. CAVALIER TELEPHONE, LLC IMPLEMENTING N.J.A.C.14:10-11:1 I~ ADMINISTRATIVE INVESTIGATION INTO ALLEGED SLAMMING VIOLATIONS Customer Assis1:ance CONSENT ORDER DOCKET NO: TC (Service List Attached BY THE BOARD: WHEREAS, this matter was commenced by the New Jersey ("Board" or "BPU" as an administrative investigation into allegations of violations by ("Cavalier", a public utility doing business in the State of New Jersey, of the~ New Jersey Public Utilities Laws, N.J.S.A. 48:2-1 ~ ("the Public Utilities Laws" and the regulations adopted pursuant to the Public Utilities Laws, and the anti-slamming provisions of the NE~w Jersey Consumer Fraud Act at N.J.S.A. 56:8-86 through 8-91 ("the Act" and regulations adopted pursuant to the Act; and WHEREAS, an investigation was initiated by Board Staff in response to eight (8 complaints of violations of N.J.A.C. 14: m gq;.(also referred to as "slamming complairrts", and Staff made findings of twenty-four (24 violations of N.J.A.C. 14: m gq;. The parties have engaged in discussions and have exchanged information regarding this matter; and WHEREAS, the parties desire to resolve this matter without resort to litigation and without any admission of liability or fault by or on the part of Cavalier; NOW THEREFORE, and in consideration of the terms and conditions herein, on the date set forth below, the parties HEREBY STIPULATE ~ AGREE that:

2 1. As used in this Order, "Cavalier" shall mean, and any of its principals, directors, officers, parent corporations, subsidiaries, affiliates, shareholders, employees, representatives, agents, assigns, successors, independent contractors/third party distributors, any trustee in bankruptcy or other trustee, and/or any receiver appointed pursuant 1:0 proceedings in law or equity. 2. By executing and entering into this Consent Order, Cavalier acjmits no wrongdoing or liability for any allegations made or implied by the BPU in the investigation, and this Consent Order does not constitute any evidence, admission or finding of wrong doing or liability. 3. This Consent Order shall fully resolve all slamming complaints against Cavalier that were received by the Bureau of Investigation on or before October 6, 2006, concerning the switching of a customer's telephone service without a valid authorization cind (2 the failure to provide the Board Staff with a separate authorization for the switch of each telephone service sold to a customer within thirty (30 days of its request. A list of eight (8 slamming complaints that are resolved by this Consent Order is attached as Exhibit "A". 4. Cavalier shall comply with all effective and applicable New..Jersey statutes, laws and regulations as adopted or amended regarding telecommunication service providers, including, but not limited to, the Act at N.J.S.A. 56:8-86 through 8-91, the Public Utilities Laws, N.J.S.A. 48:2-1.! gg.,. and N.J.A.C. 14: ! gg.,. Cavalier shall require compliance with such laws and regulations by its employees, agents, representatives and independent contractors engaged in marketing to customers in New Jersey. 5. Cavalier agrees that when utilizing third party verification to verify a customer's carrier change to Cavalier, Cavalier shall: a. Retain a qualified independent third party verifier in accordance with N.J.A.C.14: (b(3. b. Ensure that the third party verifier obtains, at a minimum, the customer's identity; confirms that the person on the call is authorized to make the carrier change; confirms that the person on the call wishes to make the carrier change; the names of the carriers affected by the change; the telephone numbers to be switchedl; and the types of service involved. N.J.A.C.14: (b(3(iii. c. Modify the -rhird Party Verification (TPV sl:ript used by the independent verifier to ensure that each customer selection of a carrier for each telecommunications service sold to that customer is verified separately, even if the same carrier is chosen to provide two or more telecommunications services, as required by ~~ 14: (d. d. Ensure that all third party verifications are concjucted in the same language that was used in the underlying sales jtransaction and that they are recorcjed in their entirety. N.J.A.C.14: (b(3(iv. e. In accordance with N.J.A.C. 14: (d1i, maintain and preserve audio recordirlgs of verification of a customer's authorization for a minimum of three (3 years after obtaining such verification. 2 BPU Docket No. TCO S

3 5.1. Provide the Board with a valid proof of its authorization to switch a complainant's telephone service to Cavalier and a valid proof for each service sold to complainant within thirty (30 days of any slamming allegation received from the BPU Within thirty (30 days of execution of this Consent Order, Cavalier shall provide the BPU with an acknowledgement that each current Cavalier employee with direct responsibility for sales or marketing in the State of New Jersey as well as any employees involved in the sales and marketing of Cavalier's telecommunications services and the TPV process are aware of the requirements set forth in or has received a copy of this Consent Order. (:;avalier shall have a continuing obligation to ensure that all future Cavalier employees with direct responsibility for sales or marketing in the State of New Jersey are familiar with the requirements set forth in this Consent Order and the applicable laws, rules and regulations. Cavalier shall train it:s staff regarding the requirements and applicable laws, rules and regulations. 6. Within thirty (30 days of the execution of this Consent 'Order, Cavalier shall provide the BPU with the name, title, telephone number and address of the senil:>r management-level corporate official designated by Cavalier to assume responsibility for the proper implementation of and full compliance with this Consent Order. Any change in the designation of 'that corporate official shall be provided in writing to the BPU within ten (10 days of the change. 7. In the interest of resolving the issues raised in the investigation and in settlement of this matter, Cavalier agrees to pay the sum of Forty-Five Thousand 00/100 Do,llars ($45, on or before April 2, Payment shall be made payable to "Treasurer, State of New Jersey" and delivered to the following address: Kristi Izzo, Secretary 2 Gateway Center, 8th Floor Newark, New Jersey If, after signing this Consent Order, Cavalier engages in any acts or practices that constitute a violation of this Order or of the laws and regulations cited herein, Ca\,alier may be subject to the imposition of enhanced penalties under N.J.S.A. 56: Cavalier shall not represent or imply that any business practice or other practice used or engaged in by Cavalier has been required or approved, in whole or in part, by the State of New Jersey or any of the State's agencies, agents or subdivisions, with the exception of the practices expressly required by this Consent Order. Order. 10. The parties agree that Ne\N Jersey law shall govern the terms of this Consent 11. This Consent Order corlstitutes the entire agreement between the parties and shall bind the parties and their respective officers, directors, agents, representatives, employees, parent corporations, subsidiaries, affiliates, successors and assigns. It is further understood and agreed that nothing contained in this Consent Order shall be construed to limit or affect the rights of any persons or entities who are not parties to this agreement, including any state agencies. 3 BPU Docket No. TCO S

4 12. Nothing contained in this Consent Order shall limit or affect any position that the parties may take in any future or pending litigation. 13. The parties represent that a representative of each has signed this Consent Order with the authority to legally bind the respective party, and that each party has full knowledge, understanding and acceptance of the terms of this Consent Order. 14. In the event this Consent Order is not approved by the Board or Cavalier in its entirety and without modification, the agreement is null and void, and no party shall have waived its litigation rights. 15. Any and all notices shall be sent to: a. Kristi Izzo, Secretary of the Board 2 Gateway Center, 8th Floor Newark, New Jersey b. Kent Papsun, Director Division of Customer Assistance 2 Gateway Center, 13th Floor Newark, New Jersey c. Martin Clift, Vice President 2134 West Laburnum Avenue Richmond, Virginia The agreement may not be amended except by written instrument executed by each party and approved by the Board. 17. This Consent Order may be signed in counterparts, each of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties. 4 BPU Docket No. TC S

5 18. If any provision of this Consent Order shall be invalid or unenforceable, the remainder of the Consent Order shall not be affected and shall be valid and enforceable to the fullest extent permitted by law. DATED: CAVALIER TELEPHONE, LLC. By: Ma~ *00 pres~ ;t- Martin Clift, Vice Presiden BOARD OF PUBLIC UTLITIES By: ~~~./' FREDERICK F.$UTLER / f.joseph L. FIORDALISO tommissioner /,,/ '-"\., I( ~ C'~~~! ~ CONNIE O. HUGHES COMMISSIONER ~ ~:~~::~~:::::::::~::!~=5~ '- CHRISTINE V. BATOR COMMISSIONER ATTEST: KRISTIIZZO SECRETARY ~ 5 BPU Docke!t No. TC S

6 I/M/O the vs. Implementing N.J.A.C.14: m~, Administrative Investigation -Alleged Slamming Violations BPU Docket. No. TC S Donald F. Lynch, III, Assistant General Counsel 2134 West Laburnum Avenue Richmond, Virginia Martin Clift, Vice President 2134 Laburnum Avenue Richmond, Virginia Karen A. Babio, Corporate Counsel 965 Thomas Drive Warminster, PA Kent Papsun, Director Division of Customer Assistance 2 Gateway Center, 13th Floor kent. oaosun@bou.state.ni.us Carol Artale, Legal Specialist 2 Gateway Center, 8th Floor carol.artale@bou.state.ni.us Charles Kaczka, Supervisor 2 Gateway Center, 13th Floor charles. kaczka@bou.state.ni.us Arlene E. Pasko, Deputy Attorney General State of NJ, Division of Law 124 Halsey Street, PO Box arlene. oasko@dol.los.state.ni.us SERVICE LIST 6 BPU Docket No. TCO S

7 Exhibit A CA # BPU Docket No. TCO S